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PayPal Really Launches on Facebook

By Jim Bruene Posted on July 9, 2007
Categories: Epayments, Facebook, PayPal

Two weeks ago I heard from PayPal corp communications who felt that my “PayPal launches on Facebook” title was misleading. They had a point. As I explained in the post, the new Facebook app was PayPal-powered but developed by Australia’s Yellow Media. The title could have been better.

However, that’s moot now since PayPal has now launched its own app on Facebook (here). It appears to have been posted on July 3 and has 218 users as of this morning. The application provides a simple interface to request and track money requests from Facebook friends (see inset above). Additional functionality is said to be on the way.

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ChipIn, Another PayPal-powered Application Launches on Facebook

By Jim Bruene Posted on July 9, 2007
Categories: ChipIn, Facebook, PayPal

Watching the explosion of content, and users, at Facebook, may be the most interesting thing we've seen since the rise of the commercial Web in 1995/1996. Marc Andreessen, not know for hyperbole, had this to say in a lengthy blog posting (here) that should be required reading for all content providers, including banks and credit unions:

(Facebook Platform) is an amazing achievement — one of the most significant milestones in the technology industry in this decade.

Every time we head over to the Facebook application directory, there's an interesting new financial app. Friday we found ChipIn, a nifty little widget that allows users to post a badge on their Facebook page or website that allows users to contribute money for a certain event or cause. It can be a charitable event such as Vancity's Bike Share program or a private event such as pooling funds for someone's birthday party. ChipIn is the second developer to launch on Facebook using PayPal's engine. The first was PayMe (see our coverage here).

ChipIn <chipin.com> is a Honolulu-based firm formed in mid-2005 with seed funding from CommerceNet. The company emerged from stealth mode in Feb. 2006 and launched its service on the Web in November 2006. The Facebook app launched June 24 and has 415 downloads as of 9 AM this morning, impressive growth compared to the 134 it had on Friday.

Initially, ChipIn was a full-service payments company, actually holding and managing the funds for users. However, after a few months of those headaches, it outsourced all payments-related functions to PayPal. Check out the Chipin blog for the full company history.

How it Works
ChipIn uses the PayPal engine to do the heavy lifting similar to PayMe that we wrote about two weeks ago (here) (see note 1). To create a ChipIn badge on Facebook, users select a Facebook event (created separately within the social network), set the fundraising goal, then customize the text and colors of the widget.

In our test, we created a ChipIn badge with the goal of raising $100 to donate to Vancity's Bike Share program (see screenshot #1 below). Although, we were able to successfully install the widget on our Netbanker Facebook page (see screenshot #3 below), we had trouble with the customization. Every time we moved from the customization step to installation, our changes were lost (note 2).

To use the widget, visitors click on the "chip in" button to launch a PayPal window. Users choose an amount to pay, then login to PayPal, to complete the transaction. A progress bar on the Chipin widget shows the progress towards the fundraising goal.

With a single click the badge can be placed within an individual's Facebook page (see screenshot #2 below). ChipIn also provides cut-and-paste code to load the badge on any blog or website. ChipIn badges can also be built directly through its website without the need for a Facebook account.

Financial Institution Opportunities
PayMe and Chipin are cool little apps that can and should be sponsored by banks, credit unions, or card issuers. Although the PayPal brand name makes Chipin relatively trustworthy, a widely recognized financial brand would be even better. At this point, ChipIn is still a tiny, relatively unknown company. If I were at a major bank, I'd write them a $50,000 check and have them rename their Facebook app, "Chipin by YourBank," instantly becoming the first bank with an official Facebook app. The company will also build white label versions you could provide to customers for use outside Facebook.

For more on how to use social networking in financial services, see our Online Banking Report on Social Personal Finance.

Screenshots

1. Simple ChipIn Widget Creation
Using an existing Facebook account and an existing Facebook event, in this case Vancity's Bike Share (thanks to William Azaroff), a new widget can be created and posted to your Facebook profile in about a minute.

2. Facebook Promotion
Once the badge has been created, the Facebook integration provides simple ways to promote the cause. You can invite up to 10 friends each day, post it on your Facebook profile, or cut and paste the code onto your own website or blog. But the key to viral growth is the Facebook mini-feed which automatically notifies all your friends about any Facebook activities, including the addition of the Chipin badge to your profile.

Posted on the NetBanker Facebook Page
Here's how the ChipIn badge looks on my Facebook profile page (here). Note, you'll need to be logged in to Facebook to view.

Notes:

1. PayPal is not the developer of Chipin, nor do they have any financial interest in the company. Chipin is an independent developer using PayPal APIs.

2. Tests conducted on July 5 using Firefox 2.0.

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Free Checking in the Internet Age

By Jim Bruene Posted on July 6, 2007
Categories: Advertising & Promotion, Bank of America, Chase Bank, Deposits, Checking, Savings, CDs

Bank of America and Chase, two of the three largest U.S. banks, are putting an online spin on free checking offers using online banking, security, and other benefits to encourage applications. On the surface, Bank of America's approach appears much more effective. And with no direct-deposit requirement, it surely generates more new accounts. However, without knowing how the free accounts convert to profitable relationships, it's impossible for an outsider to recommend one approach over another.

Bank of America
Bank of America's free checking offer (see note 1) is difficult to overlook (screenshot below). The top-of-the-page banner has animations that showcase the major benefits:

online banking
bill payment
"Keep the Change" debit card savings program
SiteKey security

The teaser "We're redefining Free Checking" creates interest while the bright blue "open an account" and "special online-only offer" further entice prospect to click through the banner.

The landing page (screenshot below) reiterates the online benefits and features a large laptop to reinforce the high-tech nature of the account. Two additional benefits are added to the list:

Free debit card with security protections
Free ATM access at 17,000 BofA machines

Notes:

1. The free checking banner appeared in a visit to the homepage from a Seattle IP address at 10 AM Pacific time today. It did not appear on afternoon searches from several computers.

2. The bank uses a live chat popup after lingering on the application for a short time (click on image right for closeup).

Chase Bank
Chase's homepage banner uses the "kitchen sink" approach with an image of an ATM machine, debit card, paper checkbook, laptop, and PDA along the top. The mobile phone is a good addition, but the ATM machine and laptop are so small, they aren't easily recognizable in a quick scan (see screenshot below).

Another problem: the paper checkbook, which is centered and slightly larger than the others, seems to get an inordinate amount of attention. I'm not sure that the checkbook or the debit card add much value. U.S. consumers pretty much realize those are included in a checking account.

Chase's landing page leaves a lot to be desired. The benefits are listed in small, gray type that is relatively hard to read. And the only call to action, if you can describe it as one, is the last line in small blue type, with an underlined "apply online." No buttons + no color + no large font + no offer = no interest.

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New Direct Bank: Element Financial from Irwin Union Bank

By Jim Bruene Posted on June 28, 2007
Categories: Deposits, Checking, Savings, CDs, Direct Banking

It's been a few months since a direct bank launched. The last one we've been tracking is FNBO Direct that launched in February (coverage here). FNBO has been in the news lately, with a video interview with Business Week (here).

The latest is Element Financial <element-direct.com>, a unit of Irwin Union Bank. The simple homepage layout includes an icons across the top that gives it a modern look (see below).

Unlike most direct banks pitching high-yield savings, Element features certificates of deposit. The lead product is a 5.44% APY CD. Rates are displayed on a unique rate table with tabs across the top listing typical deposit sizes, $5,000, $25,000, $50,000, or $100,000 (see inset).

For more on direct banking, see our previous coverage here or refer to our Online Banking Report, Lessons from the High-Rate Deposit Marketers (here).

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Bank of America Integrates Small Business Financial Services into Microsoft’s Startup Center

By Jim Bruene Posted on June 25, 2007
Categories: Bank of America, MasterCard, Microsoft, Small Business

It's extremely difficult to win the transaction accounts of small businesses. By the time you know of their existence, they already have their bank accounts in place. And most small businesses are too busy to bother switching accounts to save a few bucks a month, or even to get better products or services.

One way to grab market share is to find businesses when they are in the pre-startup phase, before they've set up banking accounts. In pre-startup, the prospective business owner is in pure research mode, spending little or no cash. To find these businesses, you need to offer online information that startups value and can find at your site, such as new-business planning advice. Then entice the owner to establish bank accounts with a package of services that appeal to a new business owner.

Bank of America is on the right track with its sponsorship of Microsoft's new Startup Center <startupcenter.com>. It's more like a product placement than a "banner ad" sponsorship. The BofA logo is never even seen in the main content area.

However, the bank's content is tightly integrated throughout, especially in the Finances area. For instance, if a business owner wants to "set up a checking account," the links to detailed information such as "compare now," "get a recommendation," and "get a business check card" all link directly to content housed on Bank of America's website (see screenshot below).

MasterCard is also a primary sponsor, but its content is less integrated. The third core sponsor is Startup Nation.

Analysis
It makes sense for Bank of America to be involved in Microsoft's Startup Center, a beautifully designed tool all decked out in "Web 2.0" colors and graphics. The content seems appropriate and useful for a startup. However, it will be a challenge for the area to gain traction with actual startups, who are unlikely to be looking to Microsoft for assistance, unless they are software developers.

But you don't have to be a mega-bank or mega-software company to provide valuable services to startups. Financial institutions can partner with local professional service firms such as accountants, consultants, and attorneys, to create content for startups such as Webinars, and in-person seminars. A well-priced package of banking services, positioned and priced for startups, will help you grab new business in the startup sector.

Examples of startup products and services at financial institutions:

CIBC startup area
Lloyds TSB Business Extra package for startups
Bank of Montreal business startup package
Simply Startup Business Checking from First Light Federal Credit Union

For more information, see our Online Banking Report on Small and Microbusiness Online Banking (here). Thanks to Payments News for the link.

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My Fave Five Banking Industry Blogs (B2B)

By Jim Bruene Posted on June 25, 2007
Categories: Blogs

I've been meaning to write this post for a while. Since I'm about to go on vacation and the posting here will be light, I encourage you to follow these blogs if you are not already. In the order that I first began subscribing to them:

Best Financial Service Industry Blogs

Best financial services news blog: Payments News from Scott Loftesness at Glenbrook Partners is far and away the best source for tracking financial industry news, especially on the payments side. Scott has an uncanny ability to find every pertinent article published anywhere around the globe. And I swear he must never sleep. For sheer scope, it absolutely blows away American Banker, the pre-blogosphere "publication of record" for the banking industry.
Best strategic thinking in financial services, especially online banking: The Bankwatch from ex-Bank of Montreal exec Colin Henderson. Colin covers an enormous amount of ground in his writings, from organizational development to direct marketing. And his involvement with peer-to-peer startup Community Lend provides an important real-world perspective.
Best behind-the-scenes look at social media, especially as it relates to financial services and the credit union space: OpenSource CU is another wide-ranging and pointed commentary from the brilliant crew at Trabian (Brent, Trey and Matt). Full disclosure: I won a $5 Starbucks card from them in a comment contest earlier this year.
Best way to track bank and credit union offers: Bank Deals, written by an anonymous engineer who is a prolific poster in his spare time. It's like BankRate.com without the advertising and forced pageviews. Unlike the others listed here, Bank Deals is a pure B2C blog, so you only get the facts, no strategic insights.
Best antidote to all the b.s. circulating online: Marketing ROI by ex-Forrester analyst Ron Shevlin. Today's post is great example, as he dismantles a recently published article that attempted to convince readers that online banking leads to more online shopping.

Off-Topic

TechCrunch: The inspiration for hundreds, if not thousands of blogs, including ours. It's been diluted a bit with more posts and more authors now, but when Silicon Valley insider and founder Michael Arrington digs into a subject, it's still a fascinating read. And with 400,000 readers, the comment stream can be even more interesting than the post.
Freakonomics: From the authors of the best selling book of the same name. While they rarely touch on financial subjects, the blog is always thought- provoking and entertaining.

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PayPal Launches on Facebook: Who Wants to be the First Bank?

By Jim Bruene Posted on June 22, 2007
Categories: Facebook, Lending Club, MySpace, PayPal, Personal Financial Management, Social Networks

The social networking phenomena has entered a new phase: eCommerce. It has always been a bit hard to visualize mainstream businesses, like banks, book sellers, or phone companies making a profit on MySpace. It's been a great place for musicians and online dating companies to grab market share, but a MySpace Checking Account didn't seem just around the corner (see MySpace coverage here).

All that changed May 24, when Facebook opened its network to outside developers, making its service more like Windows than MySpace. Already the service has grown by 3 million users, more than 10%, in the past 4 week, to 27 million (see Facebook profile in today's Wall Street Journal).

More interesting are the 893 new services have opened their doors on the platform. The most popular, Top Friends by Slide, already has 6.4 million users. Yes, that is no typo, in one month a Facebook service grew to more than 6 million users. With traditional marketing, it would have cost a bank or card company as much as $1 billion to attract that many customers assuming acquisition costs of $100 to $150 per new account.

And it's not just the one app. A new Seattle-based music preference service, iLike, has added 3.8 million. There's not a whole lot happening in commerce apps YET, the first financial company with a service offering, Lending Club (see previous coverage here), is the most popular business app, with just under 10,000 users. That's about what iLike attracts in a busy hour, but for a financial services company, and especially a startup, that's huge, a grand slam using tired baseball metaphors.

For many reasons, it takes longer for traditional companies to pounce on new opportunities. But over the summer we'll start seeing hundreds of businesses launch on Facebook. By next year at this time, the Facebook apps directory will probably look like the New York City Yellow Pages (or at least San Jose).

Financial Institution Opportunities

Searching the site, we only see four financial services that have launched on Facebook:

Lending Club's person-to-person loan marketplace
Prosper's lending game
Wesabe's personal finance groups
Pay Me, a payment service developed by Australian Ad Agency, Yellow Media using the PayPal engine (screenshot below, we'll provide more details once we finish testing it)

But so far there is no:

Bank
Credit union
Credit card issuer
Mortgage lender
Brokerage (although there are several stock monitoring service including Forbes, Yahoo, and Social Picks)
Rates tracking service
Credit report monitoring service (though Identity Guard is advertising heavily today)
Identity theft protection service

Let the race begin. But you better move faster than you've ever moved before, if you want to get the huge first-mover advantage on the Facebook platform. Good luck.

For more information, see our latest Online Banking Report, Social Personal Finance.

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Special Thanks to the First NetBanker Sponsor

By Jim Bruene Posted on June 21, 2007
Categories: Market Rates Insight

We've been blogging here for more than three years. During the first 2.5 years, the site was password-protected and available only to Online Banking Report subscribers. While that model worked fine, it didn't bring the kind of traffic that grows your business. Since we eliminated password protection, our site traffic has grown more than 100-fold.

But site traffic only increases your website hosting bill unless you have a way of garnering some revenues. And we have elected to use what we call the "value-added sponsor model." That means we seek out and offer space to highly relevant companies with products of great value to our core audience, banking and technology execs working in the financial-services sector.

Our first sponsor* is San Anselmo, CA-based Market Rates Insight. If you are a large bank, you probably already use their popular deposit- or loan-rate feeds. But the company is also in the product-tracking business, a great service I was unaware of until I had coffee with CEO Rick Barham this spring.

Since then, we've been discussing ways to work together since we are both banking product guys. Our first effort is a special offer to NetBanker readers, a one-year free subscription to its Rate Move Alert and/or its Heard on the Streets product-tracking service, a $500 value.

To take advantage of the offer, click on one or both of the banners (right), complete the brief registration form, and you're set.

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* Full disclaimer: Market Rates Insight is a sponsor but they had no control over this post. We're excited to have them as a sponsor because of the quality of their products and the special offers they've created just for you. In the future, we may thank other sponsors for their support, but we'll always let you know when we have a sponsorship relationship with them.

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Mobile Identity Theft Protection from Intersections

By Jim Bruene Posted on June 21, 2007
Categories: Alerts & Messaging, Credit Reports & ID Theft Protection, Email Marketing, Email Samples, Intersections, Mobile Banking

This week, I took a two-day break from writing the next issue of Online Banking Report, an update to our popular report on Credit Bureau Monitoring and Identity Fraud Protection (2002 report here), to attend the Mobile Commerce Summit.

Much to my surprise, an email received today nicely integrates those two topics. The offer sent was sent with the subject, "Mobile Identity Theft Protection," and it came from WireFly an online wireless reseller where I'd previously purchased a Blackberry.

Very interested to see the mobile connection, I looked at the full message (below), a well-crafted offer for Identity Guard services from Intersections. The seemingly to-good-to-be-true offer: a full year of credit monitoring, with SMS alerts, free of charge.

Apparently, Intersections, like PayPal and SunTrust, is using free credit report monitoring as an introduction to its full-service credit report and ID theft protection services. It's an aggressive move that has repercussions for the industry. We'll look at its strategy in detail in the new report to be published in July.

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Venture Funding Flows to Wesabe and Prosper; Wesabe Launches on Facebook

By Jim Bruene Posted on June 20, 2007
Categories: Facebook, Prosper, Wesabe

Two potentially disruptive startups, Prosper, the leader in U.S. P2P lending and Wesabe, the first-mover in social personal finance, both announced new funding rounds today:

Prosper took in $20 million, bringing total funding to $40 million (previous coverage here)
Wesabe added $4 million to its bank account, bringing its funding to $4.7 million (previous coverage here)

These are sizable bets on on niche markets that haven't thrown out a lot of revenues so far. But whether they succeed or not, the money will certainly fund additional innovations that will be educational for those in the banking industry.

Case in point: Wesabe launched an app on the Facebook platform, becoming the first personal finance company to do so (screenshot below). So far it's a simple front door to their group discussions, but with more development resources, it could become a full-fledged "bank" running within the Facebook community.

For more information on Wesabe refer to our latest Online Banking Report, Social Personal Finance (here).

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Technology Credit Union’s YouTube Page

By Jim Bruene Posted on June 20, 2007
Categories: Tech CU, YouTube

YouTube is mostly an entertainment site, but it also can be used by businesses in a number of ways. The best example in financial services is Intuit's viral TurboTax Rap which has now attracted more than 1 million YouTube views, if you count the parodies (previous coverage here).

We've noticed a few financial institution postings on YouTube this year. However, San Jose, CA-based Technology Credit Union is the first we've seen to fully embrace the site, creating its own YouTube page <youtube.com/techcublog>.

The credit union posted four television commercials and another homemade video they called a "podcast."* Total views of the five spots is about 500. While that may not drive much new traffic, it's a smart move considering the minimal time and zero cost to post content to YouTube.

And, for first-movers such as Tech CU, the ability to garner press and blog attention is an added bonus.* While Tech CU hasn't done this yet, embedding YouTube videos into your website is a great way to make your website look more modern and get additional mileage out of your television advertising.

So far, Tech CU has only mentioned the YouTube page is a press release about its new television ads (here). But, I'm sure more integration is coming.

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*Tech CU took a little heat at OpenSource CU about the commercial masquerading as a podcast (see discussion here). However, Tech CU ended the criticism by explaining that the podcast was a test.

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Citi Mobile on National Television

By Jim Bruene Posted on June 20, 2007
Categories: Advertising & Promotion, Citibank, mFoundry, Mobile Banking

At the Mobile Commerce Summit, we heard Citibank is running national spots featuring its mFoundry-powered mobile banking service, Citi Mobile <citibank.com/citimobile>. (Hat tip Richard Crone).

Back in the old days, like late 2006, we would have had to request a copy of the ad from the bank. But today, everything is on YouTube, so check out the 30-second spot below (screenshot at right).

While its not as appealing as Apple's iPhone commercials, the Citi spot does a good job demonstrating the utility of mobile banking. It features a close-in shot of a couple driving down the road with the wife making a quick forgotten payment in a few seconds, while still carrying on a conversation with her husband. It is also great branding, furthering Citi's long-term positioning as a technology leader.*

What it Means
National advertising by the big banks, as well as carriers introducing their mobile wallets later this year and next, will create considerable awareness among consumers. Although, usage will be light for the next few years, mobile commerce is NOT a fad. This is one area you should address very carefully in your upcoming budgeting process for 2008.

For more information, see our Mobile Banking Report.

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*Citi would look even hipper if it embedded the YouTube ad in its mobile banking landing page.

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